Themes for 2019

Like many I listened to a enormous amount of discussion about the upcoming year and what would be in store for the economy. I think there are a few things that come about from the end of 2018 that will continue and some tried and true topics that will remain important. This list is for both the national and local levels.

  • Monetary policy trends
  • Fiscal imbalances
  • Population trends
  • Policy paralysis

There are so many directions for these various different ideas at the sate and local levels that it should keep me busy for the whole year. There are clearly connections between these ideas. The monetary policy issues are twofold with concerns about the balance sheet run-off and interest rate policy. Rates are clearly important for the stock market, but this is where I start to agitated. The fact is that the economy and the stock market are not the same thing. Monetary policy can be less than ideal for the stock market and still good for the economy. If we had a president that did not equate his personal success with the level of the DJIA I think there would be less concern on Wall Street that they actually need to generate returns for investors now.

The fiscal imbalances matter at the state and national level. The fact is there is no real sense of planning toward either tax decisions and spending decisions individually, let alone in a concerted fashion. This matters greatly for the overall growth and development prospects in the near and longer terms.

Population matters and is really underrated in terms of importance in most policy areas. Whether talking about Social Security or Medicare the fact is that we are looking at age imbalances compared to the structures when policies were originally developed. Whether looking at births, paying attention to the wrong mortality rates, population remains one of the most misunderstood processes in the economy.

Divided government gives me little hope for substantive progress on economic policy. I expect more aimless drifting with easier finger pointing for both sides. Pessimistic, true. But seemingly inevitable.

Despite these issues, or maybe because of them, I am really looking forward to this year and the economic and demographic events as they unfold.

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